﻿<p>
This is how much interest you will have to pay every annually to the lender for the loan. 
Interest rate can be fixed rate, flexible rate, or combination of both over the duration of the loan.<br />
If you think interest rates have peaked and are likely to go down, you might want a floating rather than a fixed rate package.<br />
However, if you're worried about the possibility of banks revising interest rates upwards, you might want a package which fixes the interest rate for the next one to three years instead. 
It might not make sense to fix rates for more than three years since the lock-in period for most packages ends after three years. You can always shop around for a better package after that.<br />
<strong>1) Fixed Rate Mortgage</strong><br />
For somebody who wants to be sure exactly how much the monthly payment will be and not worry about interest rate changes, there are fixed rate home loans packages available. 
Fixed rate packages offer a fixed interest rate for a certain period, after which it becomes a floating rate loan. Fixed rate loans also typically come with a lock-in period and early repayment penalties.<br />

Fixed rate packages in Singapore are only offered up to 3 years, so the kind of 20 or 30-year fixed rates packages offered in many other countries are not available here.<br />

<strong>2) Variable Rate Mortgage</strong><br />
In a variable rate housing loan the interest rate can change during the loan term. The interest rate is calculated based on a reference rate and a margin. The reference interest rate is either bank’s internal lending rate or SIBOR. 
If the reference rate is SIBOR, the loan interest rate is adjusted every 3 or 12 months (depending which SIBOR the loan is tied to). If the loan is tied to bank’s internal rate, the bank usually gives at least one month notice to borrower. 
Variable rate packages can typically be repaid early, except in cases where the margin is lower for a given lock-in period.<br />

<strong>3) Combo/Hybrid Mortgage</strong><br />
A combo mortgage allows you to divide you total mortgage loan into separate parts and apply a different loan package to each of them. I
t could, for example, be two part loan with one part on fixed-rate package and another part on a floating rate package.
</p>